| Title | Sustainable economic performances of Islamic banks in Gulf countries: Bahrain, Oman, Saudi Arabia and the United Arab Emirates |
|---|---|
| ID_Doc | 67175 |
| Authors | Osmanovic, N; Puska, A; Thomas, SS; Stojanovic, I |
| Title | Sustainable economic performances of Islamic banks in Gulf countries: Bahrain, Oman, Saudi Arabia and the United Arab Emirates |
| Year | 2022 |
| Published | |
| Abstract | Achieving profitability and reducing operating costs is one of the main characteristics of Islamic banks' operations through the concept of sharing investment risk together with the borrower. This is the basic concept of Islamic banks towards economic responsibility and the concept of sustainable development. This paper specifically analyses the effects of Shari`ah-compliant financing into different sectors in four Gulf countries: Bahrain, Oman, Saudi Arabia and the United Arab Emirates. The main aim of this study is to find in which sectors increased profitability and decreased operating costs can be achieved in order to reduce the business risks of Islamic banks. In the current literature, there is a significant amount of studies about the importance of Islamic banks for economic growth and comparison with conventional banks. However, there is a research gap precisely in relation to the problem we pointed out. In our study, we conducted an OLS multiple regression model to find the effects of investments on profit and operational costs of Islamic banks. Our findings have shown very different effects of banking investments in certain sectors for profit and operating costs in selected countries. The possibility of investment diversification is greatest in the United Arab Emirates. In other countries, namely Saudi Arabia, Oman and Bahrain, we found different situations about the profitability of Shari`ah-compliant financing. The findings can be used by Islamic banks in evaluating investment decisions into different sectors and can serve as a basis for creating government support policies for Islamic banking. |
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